HTTP Streaming Is Not Cheaper To Deliver, Industry Setting Wrong Expectations
Over the past few months, there's been a lot of talk in the industry about HTTP based streaming and how new technologies like Microsoft's Smooth Streaming are going to change the future of video delivery. While most industry insiders want to talk about how technologies like Smooth Streaming enable content delivery networks to scale and delivery video cheaper than using proprietary streaming protocols and servers, to date, no CDN is charging any less for HTTP based streaming.
The big selling point I keep hearing industry people talk about is that since CDNs already have a big footprint of HTTP based servers, they can save money on not having to deploy and manage streaming specific services like FMS and WMS. While this makes sense on paper, the problem I see with the adoption of HTTP based streaming is that none of the CDNs who currently offer it charge any less for HTTP based streaming. While HTTP streaming might be cheaper for them to deploy over time than say RTMP based streaming, if they aren't passing that savings onto the customer, where's the incentive for the content owner to adopt it? Taking away the pricing argument, there are still some great reasons for a content owner to adopt HTTP based streaming, mainly having to do with higher quality, but it seems they don't know what those values are and no one seems to be talking about them.
The other problem with this topic is that industry people automatically assume HTTP streaming is cheaper for CDNs to deploy and manage, yet to date, we have no proof of that. In order to support technologies like Smooth Streaming, CDNs have had to upgrade their networks and get hands on with the technology. They have to deploy it on their network, change the way it ties into their reporting system, since this is now the delivery of chunked files, and become familiar with the service and be prepared to support it. All of that costs the CDNs time and money and until there is a big enough demand for HTTP based streaming, it's not cheaper for any CDN to deliver. Nothing is ever cheaper for a CDN unless it takes into account the economics of scale, something not currently taking place with HTTP based streaming.
Down the road, the opportunity exists for CDNs to better control their internal costs if they can use the same box to delivery any type of content, based on the standard HTTP protocol. But right now, that's not a reality. While we hear a lot of people talking about the incentive for CDNs to move to HTTP based streaming delivery, what's the incentive for the content owner? We see the value for the CDN and one of the corresponding values for the content owner could be that if it costs less for the CDN deliver, they may pass some of that savings onto the customer. But today, that's not happening. And with HTTP based streaming and multi-bitrate encoding, a content owners delivery and storage costs may actually go up, not down. Not to mention, what's the cost to a content owner who has to re-encode their content to support HTTP based streaming?
Since nearly all of the CDNs in the industry already charge one price no matter what format the media is in or what protocol is being used to deliver it, chances are, CDNs won't start discounting HTTP based streaming anytime soon. It's possible that a CDN may start offering HTTP based streaming at a lower cost to make a name for themselves or use it as a marketing pitch, but considering that all CDNs are still trying to become profitable, I don't see that being a tactic of their's anytime soon.
The value in HTTP based streaming and technologies like Smooth Streaming needs to be about something other than cost. I think the industry is setting some really poor expectations with content owners when they have heard that HTTP based streaming is much cheaper to deploy, but then don't get a cheaper price from their CDN when they ask for a quote. Customers I have spoken to are then really confused as to what the value is when it comes to HTTP based streaming services since to date, the industry has only been harping on the lower price argument.
Lower cost is not what the industry should be selling right now, since that's not taking place in the market. Yes, there is an opportunity for content owners to potentially get a lower price in the future if HTTP based streaming takes off and CDNs find a way to pass that savings onto the customer. But until that happens, if it happens, the industry and vendors need to focus on educating content owners on what the value of HTTP based streaming services are today. Not something that may or may not happen down the road.
Added: I forgot to mention that I spoke to both Level 3 and Limelight Networks who said that today, HTTP based streaming is not cheaper for them to deliver.